NY finds way to restore tax break to beer brewers

New York brewmeisters can celebrate with some Saranac beer brewed in the foothills of the Adirondacks or Brooklyn’s Monster Ale now that state officials have found a way to restore a tax break for craft beer brewers.

Gov. Andrew Cuomo and the state Legislature not only restored a per-gallon tax exemption eliminated by a lawsuit from a rival Massachusetts brewer, but New York is increasing its bet on an industry that’s flourishing despite a slow overall economic recovery. The package of laws announced Wednesday will even allow farmers to sell craft beer at farmers’ markets.

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Senate Majority Leader Dean Skelos said the agreement on the tax break for brewers won’t cost New Yorkers a dime. Instead, the state exemption of 12 cents per gallon and New York City exemption of 14 cents per gallon, which were struck down by the lawsuit, will be replaced an equivalent tax credit.

“It will be a wash,” said Skelos, whose chamber has sought this and other business tax breaks to help create jobs.

Some of the nation’s oldest brewers, including the 120-year-old F.X. Matt’s in Utica, which brews Saranac beer, lobbied hard for the changes this spring.

“Brooklyn Brewery is completing a $12 million dollar expansion and we’re proud to contribute to the economic growth of our city, our state, and the craft beer industry,” said Steve Hindy, who is one of the founders of the Brooklyn Brewery. Hindy said the loss of the exemption threated its work force and prices “just as we’re trying to attract a larger group of consumers.”

The new measures will allow craft brewers that use products grown in New York to operate like wineries, which can sell limited amounts of products directly from their own retail outlets. The bills are expected to be voted into law by the end of the Legislature’s regular session on June 21.

Farmer wineries would also be allowed to sell New York beers. In addition, farm-based breweries will be able to open restaurants, conference centers, inns, bed-and-breakfast lodgings or hotels on or next to their brewing operations, where beer-making equipment, souvenirs and other items could be sold.

“We believe the governor and lawmakers recognize the contribution our industry is making to reviving the state’s economy and are hopeful they will give us the help we need to continue to add jobs and keep prices down for our loyal customers,” said David Katleski, owner of Empire Brewing in Syracuse and president of the New York Brewers Association.

The so-called craft beer industry in New York has doubled over the last 10 years and employs 3,000 jobs in the highly automated process, according to the industry. Brewery owners said that if the state didn’t act, the lost exemption would cost brewers $10,000 to $1 million a year depending on sales.